Statoil (OSL: STL; NYSE: STO) has today 12 February 2007 presented its view on the synergy potential from the merger between Statoil and Hydro's (OSE: NHY; NYSE: NHY) oil and gas activities. Synergies resulting from the merger will fall into the following three categories:
- Lower costs, due to elimination of duplication and higher efficiency through economies of scale.
- Higher revenues, by implementing best practice and deploying scarce resources and competencies more efficiently.
- New growth opportunities because of improved international competitive position, larger portfolio and larger organisational and financial capacity.
"This merger is driven by a growth ambition," says Statoil CEO Helge Lund.
"By combining the strengths of both organisations, the merged company will be able to pursue more opportunities and take on more tasks. In addition we will be able to realise cost synergies through more efficient operations and economies of scale."
Hydro and Statoil operate as independent companies and are precluded from looking into each other's books in order to carry out detailed analyses of potential synergies. Based on own activities and analyses by an external consultant, Statoil has estimated cost synergies for the new company when the merger is completed.
The total cost synergy potential for the combined company is estimated to be about NOK 4 billion per year before tax. The cost synergies include both increased efficiencies in development, operations and exploration activities, as well as within administration and business support activities.
Important measures to realise the operating cost synergies will be reduced external sourcing and internal redeployment of personnel. Parts of the synergies will be reflected in future CAPEX. The synergy potential will be realised after a few years, around 2009-2010, once the integration process has been fully completed. Any redundancies will be managed through natural attrition and other measures to be discussed with the trade unions.
The gross operator cost synergies are estimated to be significantly higher than NOK 4 billion. The gross synergies will however not only benefit the combined company, but also its partners through lower costs in Statoil and Hydro operated joint ventures.
It will not be possible to isolate the different synergy elements separately from other cost and revenue elements in the future financial statements of the combined company. The main reason is that a significant share of the cost synergies is to be achieved through redirection of resources to areas with scarcity of resources and growth potential.
Further information from:
Media:
Ola Morten Aanestad, vice president media relations, +47 48 08 02 12 (mobile), +47 51 99 13 77 (office)
Ola Morten Aanestad, vice president media relations, +47 48 08 02 12 (mobile), +47 51 99 13 77 (office)
Investor relations:
Lars Troen Sørensen, senior vice president investor relations, + 47 90 64 91 44 (mobile), +47 51 99 77 90 (office)
Geir Bjørnstad, vice president, US investor relations, + 1 203 978 6950
Lars Troen Sørensen, senior vice president investor relations, + 47 90 64 91 44 (mobile), +47 51 99 77 90 (office)
Geir Bjørnstad, vice president, US investor relations, + 1 203 978 6950
Disclaimer:
This document does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.
An offer of securities in the United States pursuant to a business combination transaction will only be made through a prospectus which is part of an effective registration statement filed with the US Securities and Exchange Commission. Norsk Hydro shareholders who are US persons or are located in the United States are advised to read the registration statement when and if it is declared effective by the US Securities and Exchange Commission because it will contain important information relating to the proposed transaction. You will be able to inspect and copy the registration statement relating to the proposed transaction and documents incorporated by reference at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Statoil's SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. In addition, Statoil will make the effective registration statement available for free to Norsk Hydro's shareholders in the United States.
This document does not constitute an offer to exchange or sell or an offer to exchange or buy any securities.
An offer of securities in the United States pursuant to a business combination transaction will only be made through a prospectus which is part of an effective registration statement filed with the US Securities and Exchange Commission. Norsk Hydro shareholders who are US persons or are located in the United States are advised to read the registration statement when and if it is declared effective by the US Securities and Exchange Commission because it will contain important information relating to the proposed transaction. You will be able to inspect and copy the registration statement relating to the proposed transaction and documents incorporated by reference at the SEC's Public Reference Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Statoil's SEC filings are also available to the public at the SEC's web site at http://www.sec.gov. In addition, Statoil will make the effective registration statement available for free to Norsk Hydro's shareholders in the United States.